Sen. Bernie Sanders, I-Vt., said Thursday he will introduce legislation when Congress reconvenes to establish a Social Security tax for high-earning workers, hoping to buffer the entitlement program from benefits cuts.
Social Security "is facing an unprecedented attack" from both Democrats and Republicans to scale back payments and eligibility, Sanders said. His proposed legislation would institute a Social Security tax on wage earners making $250,000 or more annually. Under current law, the maximum taxable earnings subject to the Social Security tax is $106,800. Sanders argued that workers making $1 million or more a year pay just as much in Social Security taxes as a worker making $106,800.
The tax will guarantee the Social Security fund has enough funds to pay all benefits for at least 75 years, Sanders said. Beginning in 2011, Social Security started paying out more in benefits than it collected in taxes. The fund is expected to exhaust its funds by 2036, a date accelerated by the recession.
Looming over Social Security and the government's other major entitlement programs, Medicare and Medicaid, is the 12-member deficit reduction "super committee," which was created by the agreement to raise the debt ceiling earlier this month. Social Security benefits "could be cut" as part of the committee's recommendations, Sanders said.
The Social Security program would dodge any changes if the super committee fails to hit its 10-year, $1.2 trillion savings target. The mandatory spending cuts triggered by default if the committee fails its mission would come from discretionary and military funding.
President Obama's bipartisan commission on deficit reform, which released recommendations last November, called for both a blend of higher Social Security payroll taxes and benefits constrictions to balance the fund.
Republicans tend to favor Social Security reforms that do not raise taxes. Rep. Paul Ryan, in his fiscal 2012 budget proposal, said the president's commission call for tax increases is "of debatable merit."
Sanders' tax plan balances out calls from Republicans who want benefit reforms alone, said Melissa Favreault, a senior fellow at the Urban Institute who is preparing a paper on the Social Security fund.
"I can see that as a political symmetry," Favreault said. On the super committee, she said that "it seems wildly unlikely" the members will reform Social Security "all on the benefits side or all on the tax side."
What the committee decides "is a phenomenally important issue," she said, adding "I think that's why people are making statements right now and proposals."
